Maximise customer relationship

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Does your CRM dictate who your best customers are? In this lesson, Andy Hanselman, author of ‘Think In 3D’, discusses why turnover isn’t the only measure of a successful trading relationship with your customers.

Grant Leboff: Andy, in your book you talk about ‘forget CRM’. Everybody knows CRM stands for customer relationship management and a lot of us have those systems in order to do that. But you talk about something else, can you explain that for us?

Andy Hanselman: Yeah, we say forget CRM, think MCR, which is about maximizing customer relationships. I’m not knocking CRM systems but it never fails to amaze me how many people I meet and they go, Andy, we’ve got this great CRM system. It’s going to change our world and all it is a database with lots of names in it. Maximizing customer relationships for us is giving the best to, but getting the best from your customers. It’s developing the relationships with the customers that you want to do that with.

I see a lot of businesses that put a lot of effort into the customer service, which is great, but then they don’t actually maximize the relationship by getting repeat business, referrals, maybe less emphasis on price. We actually have a little model which looks at the different relationships that people have got. I don’t know if you’ve ever experienced this where, in a giving relationship where the customer that keeps saying, can you just, can you just, and that could be because you’ve done such a great job that they just keep asking you. The starting point’s got to be well at what point do we say we can, but you need to pay for it, or we need to actually make sure that it’s making commercial sense for us. So maximizing customer relationships is about giving the best to, but getting the best from the customers that you want.

Grant Leboff: Let’s assume that someone has got a CRM system with the names in, we need that, how do they then go about starting to look down that list of customers and prospects and talk about how … How do they measure that? How do they start to look at where they can maximize?

Andy Hanselman: A couple of things, start with me, is working out what does a maximized relationship look like for you in your business? In terms of profitability, it could be in terms of type of business, sort of the volumes as well as the type of work you’re actually doing with them. Then actually sitting down and working out who are our best customers. What does best look like for us? I often say best is in speech marks. I worked with one client where we got the sales guys together with a list of best customers. The Financial Director said, why are they best? Well they spend loads with us. He goes yeah, but they never pay. It’s not just how much they spend but do they pay us on time? Do they pay us? Do they develop relationships with us? Best is a starting point for me. That might actually mean, therefore, working out who your worst customers are and, maybe, saying no we don’t want to work with those or we do on these terms. It’s a very subjective thing, but we talk about this whole idea of choose them or lose them. Which is about it’s okay to say no to certain customers if it doesn’t make commercial sense. It doesn’t actually fit in with your vision about where you want to take your business.

Grant Leboff: It’s really interesting you say that because one of the things that I always talk about is define the who, the who of your customers are. I think the best businesses, actually, are aware of who their customers aren’t or shouldn’t be as the ones that they do choose. How would you go about making sure you’re attracting more of the right ones and, perhaps losing or not working with some of those ones that …

Andy Hanselman: The starting point is spelling out within your own business. Being very clear and, again, particularly making sure everybody on your team is clear, not many sales people are encouraged to go out and say no. So a starting point is this whole idea of working out who our best customers are. Then it’s making sure what’s important to them. What are the things that they really need to see from us? Our marketing efforts targeted those, but that could be then, are our networking activities targeting them? Are our business generation activities targeting them? The big one for me is are ongoing relationships targeting them? In other words, I see a lot of people spread themselves very thinly, be all things to all people, where maybe it’s about focusing on these customers that really want to work with us on our terms.

Grant Leboff: What about added value services? Let’s say you’ve got some good customers and they do pay and they’re doing all the right things and you enjoy working with them. They’re happy with you. How do we start to asses where, perhaps, there are added value services where we can maximize in other ways?

Andy Hanselman: We talk about share of customer rather than share of market. We’re actually saying, of their annual spend on the sorts of things we produce or deliver, how much of it is spent with us? In other words, are they aware of the full range of products and services that we offer? Are there opportunities just to get closer to them? The other one for me is do they have problems and issues that maybe, if we could work out what those are, we could maximize the relationship? Again, we talk about problem seeking, problem solving. What are the things that keep your customers up at night, holding them back? Work out what those things are. So we’ve got to make sure that the business is equipped to do that but, again, I think the key thing for me is making sure that this does fit in with your overall ethos of what you’re about in your business. It’s not going to be all things to all people. Even if you don’t do it, do you know somebody that does that you could refer your customers to? Again, that could be added value just by saying we don’t do this but we know a good people that do.

There may be small changes to the spoken word in this transcript in order make it more readable.

Think in 3D!

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